Retirement for many means more spare time but less spare cash. As you will have stopped working you have to sacrifice one to get the other. By having less money you will no doubt have to reduce the amount you are spending every month. This is not always an easy task because most of us adjust our lifestyle and living standards according to the salary we are earning. Of course in retirement we will not be earning a salary, just a pension which leaves two choices – either reduce the amount we spend or get a part time job. Some may have to do both of these, however this article is going to focus on the money side of things. What can you do to reduce the amount you are spending in order to enjoy a more comfortable retirement?
Make a list of everything you spend
This is a must if you are to get your bills down as you can’t reduce costs until you know what you are spending. Once you have a list, break the bills down into items which are essential and items which can be deemed as optional purchases. Also make a note as to what is a fixed cost (e.g your mortgage) and what can vary (utility bills for example). Next, work out what your monthly retirement income will be and see how many of the essential bills that covers, hopefully it will be all of them plus a bit more. If not you will have to get a part time job to supplement your income. You should also consider that if your retirement income is fixed you will actually have less money the longer you are retired due to inflation.
Work out how you can save
Now you have a comprehensive list of outgoings you need to work out just how you can reduce these. Obviously fixed cost such as your mortgage cannot be reduced which is why you should focus on items that could potentially be bought more cheaply. The obvious ones to examine first are the larger purchases such as holidays which can easily be reduced. Next look at each outgoing and think to yourself how can I spend less on this? Here are some examples…
• Food shop on a monthly basis and buy in bulk. Avoid convenience stores and making one-off purchases • Compare prices from other utility companies for your gas, electricity and water to see if you can make savings • Reduce energy consumption by turning your thermostat down 1 or 2 degrees as well as avoiding leaving your television on stand by • Buy clothes second hand by shopping in charity shops or on eBay.
Work out how you can make money
Once you have done all of these you may also want to think about how you can generate money as well as saving it. This can be achieved in a number of ways such as…
• Selling items you no longer use by having a garage sale or listing them on eBay • Moving into a smaller property and releasing the equity in your home • Running errands for people in the local area If you think creatively and imaginatively you are sure to come up with even more ideas to save money in retirement. By doing this you should be able to avoid having to make too many sacrifices and be able to enjoy a comfortable retirement.
This money saving article was produced by Simon who is the owner of pension and retirement portal 123annuityrates.co.uk